Activists on left, right grabbing spotlight at bank annual meetings

April 11, 2022 9:00 PM

The largest U.S. banks will be trying to fend off politically charged shareholder proposals from both left and right at their annual meetings this spring.

Some of the measures are familiar, like efforts to pressure big banks to reduce their financing of the fossil-fuel industry. But other proposals put a new twist on older issues. For example, one right-leaning group is seeking an audit at Bank of America centered on what it claims is discrimination against “non-diverse” employees.

Below is a look at five issues that will be put to shareholder votes in the coming weeks, including arguments that have been put forth both for and against the proposals.

A Bank Of America Branch Ahead Of Earnings Figures

David Paul Morris/Bloomberg

Push for a racial audit — but with a twist

Charlotte, North Carolina-based Bank of America faces a proposal from a conservative group, The National Center for Public Policy Research, seeking an audit centered on what it claims is workplace discrimination.

“All agree that employee success should be fostered and that no employees should face discrimination, but there is much disagreement about what non-discrimination means,” the proposal states.

The audit proposal seeks an assessment of whether pay and authority at BofA is being divided up based on “ethnic categories rather than by merit,” according to the text of the proposal.

The proposal follows efforts by progressive investors in recent years that have forced some banks to conduct audits of their lending operations to root out potential discrimination against people of color. Again this year, Wells Fargo faces a proposal from the Service Employees International Union requesting an audit to identify any adverse impacts against nonwhite stakeholders and communities of color.

In its proxy statement, BofA said that the conservative group’s proposal is unnecessary because of the bank’s focus on making progress on racial equality, civil rights, and nondiscrimination, which includes ongoing reporting.

The $3.2 trillion-asset bank said that since 2015, representation of people of color in its management levels has increased 57%, and half of its workers globally are women.

Bank of America’s annual meeting is scheduled for April 26.

Another conservative group scrutinizes charitable donations

The BofA racial audit proposal is not the only effort by a conservative group at this year’s annual shareholder meetings.

The right-leaning National Legal and Policy Center has submitted proposals to both BofA and Wells Fargo seeking reports on the banks’ charitable contributions. The group argues that without a system of transparency and accountability for those donations, bank executives may be spending money on objectives that do not align with the interests of the companies and their shareholders.

Both banks have recommended votes against these proposals, too.

Wells Fargo, which is also scheduled to hold its annual meeting on April 26, said in its proxy statement that it already provides disclosures about charitable contributions through an interactive map.

New York state makes another run at Wells Fargo’s incentive pay

New York State Comptroller Thomas DiNapoli, who serves as trustee of the state’s common retirement fund, is again asking Wells Fargo to issue a report on its incentive-based pay structures.

DiNapoli’s push began in the wake of the bank’s fake-accounts scandal, where employees who faced pressure to meet sales goals opened accounts under customers’ names without their approval. The revelations led to years of investigations, billions of dollars in fines and regulatory limits on the company’s growth.

DiNapoli, a former Democratic state lawmaker, wants Wells Fargo to disclose information about not just named executive officers at the company who receive incentive-based compensation, but other employees as well. His proposal has received slightly more support each year it has been submitted, from 21.3% in 2019 to 25.3% at last year’s annual meeting.

The $1.9 trillion-asset bank is again recommending shareholders vote against the proposal, saying in its proxy statement that a report on incentive pay could reveal confidential and sensitive information.

The bank also said that its incentive compensation risk management program provides “heightened oversight of employees in roles that may be able, individually or as a group, to expose the Company to material risk.”

Religious investors seek report on Wells Fargo’s impact on Indigenous people

The American Baptist Home Mission Societies wants Wells Fargo to produce a report on whether the bank’s policies and project financing respects international standards for the human rights of Indigenous people.

In its proposal, the religious group cited Wells Fargo’s financing for the controversial Dakota Access pipeline and a similar project in Canada, which local tribal groups have protested.

Wells Fargo is recommending shareholders vote against the proposal, saying it would be costly and would result in the disclosure of proprietary business decisions and confidential customer information. The bank also said in its proxy statement that it has issued $3 billion in credit and holds $3.9 billion in deposits for tribal governments and tribally owned businesses.

“Wells Fargo recognizes its responsibility to respect the rights of Indigenous Peoples, which includes the right to determine their own way of life on their own lands, according to their time-honored cultures, traditions, and beliefs,” the bank said in its proxy statement.

Climate activists seek to curb fossil-fuel financing at numerous big banks

A group of climate activists have filed proposals aimed at pressuring several large banks to move more aggressively to curb lending on new fossil-fuel projects.

The banks targeted are: JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley, along with Bank of Montreal, Toronto-Dominion Bank and Royal Bank of Canada.

All of the banks have recommended that shareholders vote against the measures. Goldman Sachs argued that reducing lending to the fossil-fuel industry would not lead to a reduction in the demand for fossil fuels.

While the proposals stand little chance of being approved, activists are hoping to receive at least 30% support, which could get the attention of big-bank executives.

“Banks play a critical role in this crisis,” Mary Minette, director of shareholder advocacy at Mercy Investment Services, one of the firms submitting the climate proposals, said after the proposals were announced.